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As we await the Fed's announcement at 2:15 EST, I thought I'd put up a 'comment cleaner' chart – – the Russell 2000. Of all the indexes, this is probably the one I feel most comfortable trading right now. I've done a couple of annotations here (very simple), and I've showed the 726.27 stop price. Post-announcement movements tend to be hysterically volatile, but we'll see where all the dust finally settles. Good luck to you!
You've probably read Warren Buffett's famous two rules of investing.
Ha! Ha ha!
Now, I imagine you consider this advice in the same category that I do – – – a useless bromide, equivalent to telling a newly married couple not to get divorced or a startup business only to sell successful products.
But I am taking the Oracle of the Really Unfortunate Town to Inhabit to heart today, since I've had a great run, and I want to protect my hard-won profits. There is no worse feeling in the world than seeing a profit turn into a loss, so I have been:
The Fed announces today, and it is widely expected they will simply leave interest rates alone at 2%. As always, the "EKG" effect on intraday charts will be in full force. Hang on tight, and keep your eye on the big picture instead of the latest tick.
I liked today a lot. One, my portfolio went up substantially – – over 15%. Not bad for one day. And two (and this is the part I really like), it didn't take some nutty market collapse to make it happen. The Dow fell 0.37%. Nothing!
The reason for my positions surging was that my hypothesis, which I've been pretty vocal about, is panning out. That is – – energy: down; equities: down. Not inversely related. Again – – – energy (and commodities in general, while we're on the subject): down; equities: down.
Now, just like no "up" is straight up, no "down" is straight down. Looking at the continuous crude contract (how's that for alliteration?), I'd say we're probably in for a breather when oil gets to $112 a barrel or so. People were ga-ga bullish when oil was $140 a barrel. I can only imagine some futures n00bs got their scalps handed to them already.
The OIH has cut through its fan line, and – just eyeballing it – I'd say $170 or so is a good target. Not to say that oil and the OIH have much, much farther to fall. I'm just talking about the coming week or two.
I sure wish $XAU options were more liquid. I'd really enjoy that market if they were. But they're not, and I avoid it……….which is unfortunate, since it's a really dynamic, technically-interesting market. The $XAU has plummeted an incredible 25% in just a few days. Here again, commodities n00bs (on the long side, at least) surely were surprised. But fortunes were made on the short side.
I have a quantity of positions that ticks a lot of Garys off (80), and yes, it's cumbersome. I took a little money off the table today, but mostly I tightened my stops. Looking at the $CRX, it seems sensible to have a bit of a bounce here, but for goodness sake, I've seen so many graphs like this lately, and sometimes they don't wait for a bounce; they simply cut through the trendline and take no prisoners.
And, oh, yes, my good friend $UTIL. I walked into the palatial office of my network guys today, and I wrote "SDP" in huge letters on their whiteboard. There is no more "jumping the gun" here. This is a head and shoulders. It's complete. The neckline is cut. And this thing is ready to rock.
The Beijing Olympics (which had the inexplicable magical power to lift the Chinese stock market – – I still don't understand the logic behind that one) starts on Friday. Does this mean we can look forward to a serious plunge after the games are over? As if it hasn't plunged enough. I bought some FXP today (it's been quite a while……….).
My puts are strictly on the $RUT, and the position isn't that huge. I might even take it off the table thanks to almost assured Fed wackiness Tuesday at 2:15 EST. As for the $NDX, I'm keeping a close eye on this one to see if it marches toward the fanline above or snaps its ways down to the line below.
The Russell 2000 – – awww, should I even say it? – – OK, my apologies – – is in the formative stages of the mother of all patterns. There is huge debate about whether there's another push higher in the cards (S&P 1320) or if we've had that run already. Search me.
I've got a handful of ideas for you, some of them new. Here's Ace, Ltd.
CEG looks like another H&S.
I have no position in FNM, but this stock sure doesn't look done falling. Don't you think a disaster is going to happen here? Doesn't it seem like its fate is sealed, bailout or not? Just sayin'.
I sold my POT put for a huge profit today, but only because it was an August put (my only one left) and I get very jumpy owning options in the same calendar month as they expire. If this strengthens back to 200 or so, I'll jump right in again.
SGMS burned me just a little recently, but I'm still watching this pattern with great interest.
The energy sector is stuffed with issues that have broken huge trendlines. I like RIG.
Finally, here's another clip from Don Harrold. I feel a kinship with Don since (a) he gets really ticked off at B.S. (b) he gets paid $0.00 to reveal it to the world. Go, Don, go!
While you're waiting for me to put together today's post, here's the second news clipping I had.
Congressman Frank Oliver: Is it not a fact that the collapse in the prices and disappointment of the people is teh main reason why they are blaming everything on the stock exchange?
NYSE President Whitney: Very likely, but that is a mere conjecture of my part.
Congressman Frank Oliver: But the stock exchange has no agency and does not purport to have any to evaluate stocks.
NYSE President Whitney: None whatsoever.
Congressman Frank Oliver: When [stocks] collapsed from the high to the low, the public started to blame "the shorts" for that. Is that not a fact?
NYSE President Whitney: I think from a hindsight point of view, they blamed the shorts.
Congressman Frank Oliver: They blamed the shorts, whereas, as a matter of fact, if the prices were inflated, they should have blamed the "longs" for having inflated them?
NYSE President Whitney: And themselves.
Congressman Frank Oliver: But instead of being logical about it, and blaming those who inflated prices, they blamed those who might have deflated them had they the power at that time – that is, the "shorts"?
NYSE President Whitney: Yes.
The date of this House Judiciary hearing? February 24, 1932. Markets change all the time. People never do. That's why technical analysis works.
